Labour pledge on corporation tax

Labour is risking a new clash with business with a pledge to reverse the Government’s final cut in corporation tax just weeks after it is due to come into effect, if the party gains power after the General Election on May 7.

On the first full day of campaigning, shadow chancellor Ed Balls said the move would enable them to throw a lifeline to smaller firms – cutting business rates on 1.5 million small business premises – rather than the big firms who benefit from the reduction in corporation tax.

However the Conservatives warned that it could lead to the loss of almost 100,000 jobs, putting economic security at risk, “for the sake of making a political point.”.

David Cameron, meanwhile, is promising the Conservatives would help business create another two million jobs over the course of the next parliament if they are returned to Downing Street.

Deputy Prime Minister Nick Clegg is focusing on the Liberal Democrats’ plans to pump an additional £2.25 billion into improving mental health services if they are back in government.

Mr Balls will say said that the first budget of a Labour government would cut business rates for 1.5 million small business properties- worth an average of £400 – to be followed by a freeze the following year.

Labour say that 17 small firms would benefit from the cut for every one large business helped by the reduction in corporation tax – first announced in Mr Osborne’s 2013 Budget – which takes effect next month.

They argue the coalition spent £7 billion over the last parliament cutting the main rate of corporation tax to the benefit of larger firms while revenues from business rates rose by £3 billion, at an average cost to firms of £1,500-a-year.

Mr Balls, who is visiting a small business later today, is expected to say: “Unleashing the potential of smaller businesses to grow, create more good jobs and raise living standards is a vital part of Labour’s better plan

“This is part of our plan to deliver a simpler and fairer tax system for small businesses. This is the right priority when money is tight. And it will mean that the tax burden on small businesses will be lower with Labour than under the Tories.”

However the move risks re-opening the rift with some big business leaders who have strongly criticised Labour’s spending plans.

It comes the day after some company bosses complained at the way comments they had made expressing concern about the prospect of Britain leaving the EU were included in a Labour advertisement attacking the Conservatives.

For the Conservatives, Treasury minister David Gauke said that abandoning the cut in corporation tax would jeopardise economic security.

“This would be the first time corporation tax has risen in over 40 years and Labour’s plans could cost 96,400 jobs – it would put people’s economic security at risk,” he said.

“The Conservative Party is helping businesses small and large as part of our long-term economic plan – we don’t divide them up for the sake of making a political point.”

Mr Cameron is promising a Conservative government will help business create two million new jobs over the course of the next parliament – double the current forecast of the Office for Budget Responsibility.

The Prime Minister said the alternative to the Conservatives’ plans was a return “to square one, and the days of big unemployment”.

“We are the jobs party – and over the next month, we will be fighting for every man and woman who wants to work and earn a wage,” he said.